Charging and deducting VAT
Affected by Brexit?
When VAT is charged on goods or services the term 'taxable supplies' may be used.
If you are in business and you supply goods or services, you normally have to:
- register with the tax authorities in the EU country where your business is established;
- charge your customer VAT and account for this to the tax authorities.
Money does not actually have to change hands for VAT to be due — you may also have to charge VAT (usually on market value) on goods and services that:
- you exchange for other goods or services;
- you give away for free;
- you acquire for your own private consumption.
If you are in business, you can usually deduct the VAT you have paid on your own business purchases from the VAT you charge your customers; you then only need to pay the difference to the tax authorities, and report these amounts to them in your periodic VAT return.
Sometimes, the VAT your business has paid exceeds the VAT you have charged to your customers. If so, the tax authorities should reimburse or credit you with the difference.
- Hungary *hu
- Iceland *is
- Latvia *lv
- Liechtenstein *li
- Romania *ro
- United Kingdomgben
* Information not yet provided by national authorities
VAT on invoices
Normally, if you are registered for VAT and you make sales to other businesses, you must issue a VAT invoice — either in paper or electronic form. VAT is normally added to the price of the goods or services on your invoice.
Your VAT identification number must be shown on all invoices you give to customers, as well as the amount of VAT being charged and other standard items.
There are some exceptions to this rule.
For example, if you provide a service to another business, that is not located in the same EU country as your company is based, the VAT will not appear on your invoice. This does not mean the service is not subject to VAT, just that the VAT would be accounted for and paid directly by your business partner in the other EU country.
Similarly, if you make an export of goods to a non-EU country, your invoice will not show VAT. Normally, the buyer in the non-EU country will be subject to importation rules of its country.